As the month of May draws to a close, it’s May Day for FERC’s Order 745 rule on demand response,vacated by the D.C. Circuit last week. So fittingly,this May 2014 issue of our newsletter offers an indepthreport on the court’s ruling. And there’s also around-up of firm highlights if you’re interested in what we’ve been up to since the last newsletter.

It’s been nearly five months since the DC Circuit heard oral arguments arguments on the petition for review of FERC Order 745. In case you’ve forgotten, Order 745 is FERC’s landmark rule requiring comparable treatment for demand response and generation resources by required RTOs and ISOs to pay the full wholesale price (also known as locational marginal price (LMP)) for demand response resources participating in wholesale markets. But Order 745 was not without controversy; Commissioner Moeller dissented, arguing that LMP pricing would result in double payment to demand resources and a group of economists even filed an amicus brief at the court, which largely supports Commissioner Moeller’s approach.

For most courts, a five month wait for a ruling isn’t earth-shattering. But the D.C. Circuit usually dispatches FERC rulings at a much faster pace. In fact, last year, all but two of the court’s thirteen decisions in FERC cases issued within three months or less from the date of argument.

So what does this all mean? Used to be that a waiting time of longer than two months meant a win for the appellants and a reversal or remand of the FERC order. While that’s no longer the case (as last year’s calendar shows, FERC won the two of the cases that took the longest to decide, while FERC lost in one of the cases where the court ruled in a scant six weeks. Still, at a minimum, the five month wait suggests that the court may be having some difficulty in reaching a decision.

And that’s not surprising. During the oral arguments (which I listened to recently), most of the court’s questions related not to FERC’s LMP pricing methodology, but rather, to FERC’s jurisdiction to set pricing rules for demand response at all. On the one hand, when demand resources are aggregated and offered as a bundle into wholesale markets, they resemble the same type of wholesale sale over that FERC has exclusive authority to regulate under the Federal Power Act. Yet, on the other hand each individual aggregated transactions – all of the industrial and commercial and even residential customers who sign up to agree to curtail power in exchange for payment – is essentially a retail deal, which states have long regulated. So there’s a question of whether FERC’s demand response rule regulates indirectly the retail rates that it cannot regulate directly.

Not only is the demand response question a tricky one on its own, but the issue is further complicated by the pending Order 1000 appeal which also raises questions about whether FERC exceeded its authority and encroached on state rights. The court may have this case on its mind as it works through the demand response appeal.

It’s possible that the court, if it’s on the fence may try to split the baby, perhaps remand the demand response rule to FERC for further consideration. If that happens, that’s where the fun begins. Chairman Wellinghoff, chief architect of FERC’s demand response policy has left the Commission. Commissioner Moeller who authored the dissent now has “partner in crime” with Commissioner Clark who often joins Commissioner Moeller’s dissents or authors his own. Meanwhile, FERC is still operating with four commissioners until the Senate confirms the President’s recent nominee, Norman Bay.

In the nearly three years since Order 745 issued, demand response has become entrenched in power markets. So it’s not clear whether invalidating FERC’s rule or remanding it for further explanation will have much effect at this point. We’ll keep our eye out for the court’s ruling because whichever way it goes, the decision is bound to offer insight about where to draw the line between FERC and state jurisdiction, wholesale and retail transactions. After five months, the court undoubtedly will have something to say about that.

It’s time for another quick round up of social media sightings in state utility commission decisions. For those unfamiliar with the round ups , I search terms like “social media,” Facebook, LinkedIn and Twitter in my LEXIS public utility commission data base to see how many times they’ve been mentioned. Since I started tracking back in 2009, social media related terms have risen from just a scant handful of 9 mentions to 21 in both 2011 and 2012. This year, I’ve found ten mentions to date – which is on track to match the previous two years.

Even more interesting, however, are the increasingly varied ways in which social media is getting attention. Once used almost exclusively for consumer education on green power and efficiency options, today, commissions are insisting on social media use by utilities for crisis communication and allowing utilities to employ it to communicate curtailment or to retain as contact information. The summaries below highlight some of the most interesting social media sighting in the past six months.

Social Media for Consumer Education

Utilities continue to employ social media for consumer education programs. Both Indiana Commission (2013 Ind. PUC LEXIS 119) and Kentucky Commission (2013 Ky. PUC LEXIS 181) approved utility proposals to promote energy efficiency programs through a variety of mechanisms, including social media. North Carolina Commission 2013 N.C. PUC LEXIS 369 allowed cost recovery for a program that incorporated social media to inform customers of the utility’s demand response programs. Finally, the California Commission noted that it would consider funding for a consumer education program for a utility’s emergency curtailment program once the program was developed more fully.

Social Media for Crisis Communication

In the wake of storms – from Hurricane Irene to the Derocho in Maryland and an early October storm in the Northeast, utility commissions have investigated how utilities used social media to communicate with consumers and how social media might be used in the future. For example, the New Jersey Board of Public Utilities (2013 NJ PUC LEXIS 34) noted that utilities must communicate both before and after storms through a variety of means including social media. Multiple communication channels are important because not all consumers are comfortable with all formats, the Board observed. Finally, the Board required JCP&L to prepare a plan which, among other things, must show how social media will be used to augment press releases and play a part in providing more frequent and accurate updates during an event.

The New Hampshire Commission (2013 NH PUC LEXIS 16) is currently investigating utility response during the October 2011 snow storm, including use of social media to inform customers.

Other Uses

Besides these major categories, social media came up in other situations. In a case involving vegetation management before the North Carolina Commission (2013 N.C. PUC LEXIS 590), the Commission took note of a Facebook Page populated with photos of trees created by a ten year old girl opposed to the utility’s tree cutting plan. The Tennessee Commission (2013 Tenn. PUC LEXIS 66) rejected a petition by a homeowners association for a certificate of public convenience and necessity for acquisition of a water utility in light of complaints by residents of problems contacting association management. The Tennessee Commission noted that the Association did not even have a website, Facebook page or Twitter Account.

Last but not least, the California Commission is using social media – or social media training – as a penalty. Recall the case two years ago where a PG&E Director William Devereaux posing as a citizen named Ralph infiltrated an anti-smart grip online discussion forum. Devereaux was quickly outed, and the matter moved to the California Commission to determine whether PG&E was aware of or endorsed Devereaux’s conduct.

That proceeding has since been settled in this California Commission decision . (2013 Cal. PUC LEXIS 120). As relevant to social media, the Commission’s settlement order requires PGE hire a third party to conduct trainings on relevant issues of social media use and proper online protocols before NARUC and the Ethics and Compliance Officer Association. Finally, PG&E must improve employee education on use of social media by incorporating PG&E’s Social Media Standard messages into its Code of Conduct an add a video addressing social media as part of its training.

]]>http://www.lawofficesofcarolynelefant.com/fercfights/?feed=rss2&p=8070Next Generation Energy Law May Newsletter Has a New Lookhttp://www.lawofficesofcarolynelefant.com/fercfights/?p=802
http://www.lawofficesofcarolynelefant.com/fercfights/?p=802#commentsFri, 03 May 2013 19:59:53 +0000Carolyn Elefanthttp://www.lawofficesofcarolynelefant.com/fercfights/?p=802

The May Issue of Next Generation Energy Law Newsletter is now available with a fresh new design. You can check out the new look and read the newsletter here; past issues are available here. To subscribe, click here.

]]>http://www.lawofficesofcarolynelefant.com/fercfights/?feed=rss2&p=8020The March Edition of the Next Generation Energy Law Newsletter now available!http://www.lawofficesofcarolynelefant.com/fercfights/?p=795
http://www.lawofficesofcarolynelefant.com/fercfights/?p=795#commentsWed, 20 Mar 2013 14:28:31 +0000Carolyn Elefanthttp://www.lawofficesofcarolynelefant.com/fercfights/?p=795

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